Developments within the consumer-related data stood out in the 2Q24 Senior Loan Officer Opinion Survey, especially when paired with the G.19 Consumer Credit report and latest retail sales numbers. Standards for credit card loans mostly remained unchanged at tight levels and demand was moderately weaker, while the setup for auto loans worsened (tighter standards, weaker demand). If real economic activity were to improve from here, we would expect to see evidence of credit conditions becoming more favorable and demand for credit to increase.
Source: Macrobond.
Turning to credit use and spending, revolving credit increased by $152 million in March, down from $10.73 billion in February, its smallest m/m change since the negative print in April 2021. Also in March, the personal saving rate declined to 3.2, its lowest level since October 2022, and nominal retail sales accelerated by 0.65% m/m (inflation-adjusted retail sales were 0% m/m). For April, the m/m pace of retail sales growth slowed to 0%, putting inflation-adjusted retail sales into negative territory as the Consumer Price Index accelerated by 0.3%. The takeaway from this data is that there has not been a meaningful acceleration in real consumer activity in the last part of 1Q24 and to start 2Q24.
Source: Macrobond.
Flat revolving consumer credit growth in March and flat nominal retail sales growth in April corroborates the SLOOS consumer-related data and could indicate the demand impact of tighter conditions. One month or quarter does not make a trend, but the consumer credit setup will be important to watch as we move through the rest of the year.
The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance. The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.
Investment Strategist
Boyd Watterson Asset Management, LLC